1. Understand your type of financing – This is one of the biggest obstacles when it comes to buying a home. Mortgage products such as FHA, VA, Conventional, RD, FHA 203k (just to name of few), what is this all about? Your lender should be ready, willing and able to educate you. Your agent should also know how each of these types of loans will affect YOUR next new home purchase. Not all homes qualify for all types of financing. A bank owned home may only be able to be purchased for Cash or FHA 203k (not the same as FHA). Have you heard the expression ‘your pre-approval is only as good as the paper it’s written on’? Ask your lender if he/she has DU (desk-top underwriting) and ask him/her to run you through their system. Once you have done this, your pre-approval should be pretty solid. There are MANY lenders online who will give you pre-approvals without this, and when it comes time to actually BUY your home, you may not qualify. Ask questions until you understand. It’s the biggest purchase you will ever make. And you cannot make an offer without a pre-approval. Additionally, ask your lender what hours do they work? Nights? Weekends? How late can you contact them? If you work nights, and sleep days, you need a lender that can accommodate your schedule should questions or issues arise. All lenders do not offer the all mortgage products, so ask your lender what products they offer. In general, mortgage brokers offer more products than mortgage bankers. Know the difference and find the person that offers what you need and has options should you need them.
2. Have your agent set up a search on the MLS for you! Spending hours on third party websites? You're in good company, most buyers start here. But is everything SOLD before you see it?! As agents, we spent great money on our membership to our MLS system and we are happy to share it with you! A good agent will set up your criteria and send you listings. Did you know that different markets in MI have different MLS systems? If you are looking in different counties, or a myriad of cities, ask your agent which MLS system they belong to and if they have access to other systems. A couple things to note here: do not scale back your criteria too much. You may miss out on a great home. The input into the system is only as good as the person who inputs the listing. Mistakes are made all the time (we are human afterall), so decide what the MOST important aspects of your new home will be, and ask your agent to keep the search as open as possible. 3rd party websites derive their information from our MLS as well as other public data and often times are not updated or the information is just not true. Getting a search exclusively from your agent is the BEST way to find your next new home.
3. Understand ‘what you get for the money’ – It’s fun to dream about where you want to live, what your next new home will look like, etc. Ask your agent to provide you a list of SOLD properties that match your criteria in your area of interest within the last 90 days. This is a fast moving, challenging market and it’s important that you are being realistic about what you can buy vs. what you want to buy.
4. Do not put your home up for sale until you have seen other homes that are available. This has become a big challenge for 2014 seller and will continue through 2015. Move-in ready homes can sell within the first day. While your agent may be able to buy you extra time to move out, do not count on it. Make sure you know what’s on the market, how long homes are staying on the market and ‘what you get for the money’. Do ask your agent to give you a list of SOLD properties that match your criteria in your area of interest within the last 90 days.
5. Don’t talk yourself into a home. If it doesn’t feel right, move on. While there is no such thing as a perfect home, the one thing that I see in my business is the home that is meant for you will be there. There is no need to feel rushed and don’t allow any agent or lender to rush you with risk of rates skyrocketing! Rates are still historically low and another half point isn’t going to dramatically change your monthly payment over the next 30 years.
6. Don’t tolerate an agent who is non-responsive or takes days to get back to you. As agents, we work on commission, yes, this is how we make our money. Ask your agent how they prefer to work? What can you expect from them? Find an agent that matches your needs, personality and returns your calls and emails within a 2 hour window. Most agents have smart phones and get their emails, texts and calls around the clock. Additionally, if you have an agent who is a ‘Debbie Downer’ or talks incessantly about himself/herself, cannot make it on time (or at all) to your showing schedule, cancels at the last minute, is willing to give you lock box codes, or displays otherwise unprofessional demeanor, RUN! If you have signed an agency agreement with an agent that you do not want to work with, that is fine. Be honest with your new agent and let him/her help you to get out of that agreement if it’s possible. Buying a home should be educational and FUN! You deserve great service. Ask your agent how they prefer to work, how early or late can you contact them, do they email, do they text? And don’t be afraid to try a newly licensed agent! New agents are hungry, ready and willing to service you! If you feel apprehensive about their lack of experience, that is totally reasonable,but the odds are, they have great backup within their brokerage and will be able to get you to a closing table! It is a fact that we will not mesh with every personality and that is okay! You should have an agent that you enjoy spending your time with, that you trust and that makes you feel like your home search is important to them. Interview your agent, this is…I will say it again…the biggest purchase of your life! Ask, ask, ask.
7. Looking at foreclosures? A rehabbed property? Tread lightly. Have your agent explain what a C of O (certificate of occupancy) is and how it will affect the home you think you want to make an offer on. Many municipalities require an inspection before you move in. It will be up to you to go to the local building department and make sure you know what a city inspection will cost (can be up to $500), who pays for that,has one already been done, how much are the repairs going to cost you? If you are buying a rehab, the city should have on file all permits for any HVAC, Plumbing, Electrical or Building items that have been done to the home, where required. Skipping this step can cost you thousands in the long run and that great deal can turn into a great dud. While you are at the municipality, be sure to ask if there are any fees due on the property that may have accrued while it has been vacant (lawn cutting, snow plowing, vacancy fees, water bills, etc.). You will want to make sure all of these outstanding fees are given to the title company PRIOR to closing, or you will have to pay for it after you buy it. That can cost hundreds to thousands of dollars. Do your own due diligence! And make record of whom you talked to, questions you asked, date and time. Do not rely on your agent to do this work for you. This is YOUR next new home and any surprises ultimately become your responsibility. Ask, ask,ask!
8. And while we are on the topic of due diligence, make sure you contact the tax assessor at the municipality and double check what your taxes will be. If a home is non-homestead vs. homestead, if it’s a foreclosure and you intend to rehab it, if it has been rehabbed (just to name a few), if it's new construction…these items ALL affect the tax base of your home. Ask, ask,ask!
9. Do not skip a PRIVATE home inspection. This is completely different than a municipality (city) inspection. The inspection can cost up from a few to several hundred (or more, depending on the size of the home) but it will be the BEST money you can ever spend to know everything about this asset you are getting ready to raise a family in. In Michigan, Private Home Inspectors are NOT required to be licensed! (I know, CRAZY!) Make sure your inspector is ASHI and NAHI certified.These are certifications that mean your inspector is continually educating himself/herself and these will in the least weed out the least qualified. Your agent should be able to recommend an inspector. Also, if the home is built in 1980 or prior, it may have a clay sewer pipe.(This is the pipe that goes from the inside of your home out to the sewer). These pipes are only meant to last 50-60 years. Tree roots wrap around these and can cause cracking or collapsing. Please make sure you have a sewer camera inspection (unless you have septic, then you need a septic inspection). You will need a plumber that has a camera do this sewer inspection and you can expect to pay about $100 or so. That is nominal in comparison to what a new sewer line can cost which can be upward of about $3,000 on the low end. Just because you don’t see big trees in the yard doesn’t meant they weren’t there before! Talk to your agent and inspector about the varied inspections you will need and may want. Want to know about ASHI and NAHI certification?
10. Real estate contracts can be so confusing! Never sign anything that you do not completely understand. Your agent should be able to explain them in layman’s terms to you. If you feel the need to take them to your attorney, please do so. It’s so important that you understand what you are buying (same thing goes for your mortgage documents). Ask, ask, ask!
11. Make sure your agent prepares you for what you can expect from start to finish. While getting to a closing table will have its challenges from time to time, buying bank owned homes can present further challenges. Whatever you’re buying, make sure you understand the process. If everyone is on the same page, and no one is making assumptions, I can assure you the process will be much smoother!
12. I read online the other day that ‘appraisals are no longer an issue’! Well, I can tell you that here, in the State of Michigan, and this being 2014, that they are very much still an issue. Work out a back-up plan with your agent should the home that you are purchasing not appraise. And as long as we are talking about appraisals…
13. Create a great offer! This is a very competitive market. Ask your agent to provide you a list of comparable sales in the area within the last 90 days. Some asking prices are so out of whack that you may feel compelled to offer at ask. These are asking prices. Your agent should be able to help you come up with an offer that a) will getaccepted and b) will appraise. And as long as we are talking about accepted offers, be leery of any agent that wants you to ‘bring the difference of the appraised value and the purchase agreement value in cash to the table’. Either a home is worth the appraised value or it is not. There are times when this tactic is important, but usually it’s just hype. KNOW THE VALUE OF THE HOME YOU ARE PURCHASING. Your agent may tell you that the appraisers just haven’t caught up with the current market. Yes, in some cases this is true. But the appraiser drives the price of the home! There are MANY of ways to get your offer accepted without bringing ONE EXTRA PENNY to the closing table. Your agent should have a ‘bag of tricks’ to help you that don’t include you paying more money than the home is worth. If you have the extra money, you LOVE the home and cannot LIVE without it, that is totally up to you. No one should expect you to do it or make you do it. My job, as an agent, is to sell your offer to the seller. Ask your agent how they intend to do this and brainstorm with them about it!
14. While you are under contract, please don’t open a new a credit card, finance new furniture, buy a new car, co-sign for anything for anyone, change or quit your job WITHOUT talking to your lender first! Any of these items can change the entire deal or leave you without the ability to buy a home at all. Everything you do with your money should be the normal routine. You can buy new appliances after you close on your home! Do know that banks will check frequently, up to and including the day you close whether you still have a job or anything regarding your credit has changed. If something serious happens, like a job loss, accident, new job offer, etc. while searching for a property or while waiting to close, it is important to share that with your agent and your lender.
15. Understand ‘Agency’ and what it means to you! When a home is listed with an agent, that agent works for the SELLER. Your agent, a BUYER’s Agent, works for you! Just as you would not talk to the Defendant’s attorney directly if you were a Plaintiff, the same idea applies here. As your Agent about ‘Fiduciary Duty’ and have your agent show you the Agency Disclosure contract, explain it to you in layman’s terms and read it before you sign it so you have a complete understanding as to HOW that agent is representing you. Remember that it costs you nothing to use a Real Estate Agent to buy a home (except maybe a compliance fee charged by the brokerage, ask about this). We make our money from the Seller in most cases. If you have an agent you ENJOY, you TRUST, you RESPECT and the feeling is mutual, and you communicate openly with each other, then you should have a nice, smooth experience. Have FUN buying your home. Educate yourself and ask as many questions as you need to. There are NO dumb questions when it comes to buying real estate. The educated decision is the best decision!
This information is owned by Shannon Hall. Any duplication is illegal.If you would like my permission to duplicate, please ask me.